Thursday, February 15, 2007

Seven Nation Army

I'm gonna fight 'em all
A seven nation army couldn't hold me back
They're gonna rip it off
Taking their time right behind my back

Another day, another lifetime high on the Dow. C'est la vie.

I mentioned BHI as a short a few days ago , and it got walloped. Even put options that are several months out doubled in value today. Oil in general (be it OIH or a component) is pretty attractive to my bearish eyes right now.

I'm pretty proud of this graph, so click it to see a big version. It's a minute bar of the NZD/USD forex trade I've been suggesting. The symmetry between the phases I've shown here is really intriguing to me. I've numbered it for clarity. I've been trading it both up and down (long and short) during the most recent cycle. I imagine we're about ready to head back into a long tumble now. This is a really fun currency to trade, in spite of the wide pip spread.

The Russell 2000 remains my favorite index on which to own puts right now. Put values have been getting creamed lately by (a) rapidly rising index values and (b) withering volatility premiums. A one-two punch. Call me crazy, but I am loading up on them at these levels.

Allstate (ALL) has a dainty head and shoulders pattern that I think is worth trading, since it seems to have fully retraced.

BBD has a clean relationship with its Fib retracement.

This is a bigger graph than I normally show - ten years - and it's of Goldman Sachs (GS). I still love this short.

HES is another fresh one I'd suggest you check out.

I've still got my IYR puts. They're under water, but just take a gander and how lofty this sucker is.

My MTH short is still solid. I am once again showing a bigger graph so you can understand how far this thing could fall.

OXY is another oil short worth examination.

PCU isn't as clear-cut, but it's at the top of a channel, and I'm going to nibble some puts on this one tomorrow.


sami said...

i own the March 95 puts on IYR... underwater, but i am hopeful.
i was looking to play the Feb 70 puts on PCU tomorrow on option expiration day. may be a crazy idea, but i am thinking of buying them early in the day and seeing how it plays out. with pretty much no time premium left, it would be similar to a day-trade on the short side with a fraction of the capital.

Oneway said...

thx for finally showing a chart with fib. extensions.

z-stock said...

Giving due where due is due. Gutsy call on Bhi. I’m a little amazed by the result.
Beannie1** Nyx abc 123 A truly valiant effort. To be commended. Short term Target is still 95/99. or new yearly hi.

h. lovil said...

What is it about GS you like on the short side apart from being hammered by the longs again and again??

Lauriston said...

MSFT might help bears tomorrow... i hope

z-stock said...

I don’t know why you keep mentioning Goldman Sachs. The odds are definitely against the bears. However,
The day is coming when you’ll be able to say Here’s the “Head and Shoulder pattern.”

I can’t wait for that day. We’re all going to make millions.

When I try to calculate the 1000’s of percent the option is going to go up, my calculator keeps running out of zero’s.

In the mean time a nice $50+ drop could be the basis for the first shoulder.

jtriplo said...

Mr. Knight looking to short IWM here just curious can you tell me how far out are you buying puts? March ,May or further. Enjoy reading your blog thank you. Joseph

beanie11111 said...

GS has really really really topped out! Short it! Triple topped.

Tim Knight said...

To respond.......

"What is it about GS you like on the short side apart from being hammered by the longs again and again??"

I like its high price, which means puts could go up massively in value. I like that it apparently is losing upward momentum. And I like the fact that the options are fairly high volume, meaning the bid/ask spreads aren't horrible.

"Mr. Knight looking to short IWM here just curious can you tell me how far out are you buying puts? March ,May or further."

I'm buying Mays and further at this point.

tokyodiablo said...

tim, i have joined the world of charting bloggers:

see you there!

z-stock said...

experiment....with picture insert